Return on investment (ROI) is a performance measure that requires managers to respond to several factors that are under theirInfluence or control Decisions Intended to influence ROI are often from a short-term perspective and may conflict with the long-term objectives of the organization. This lack of goal congruence can be minimized by
- A . providing the manager with limitationson what can be used to influence the factors involved in computing the ROI.
- B . using the two components of ROI (investment turnover and return on sales) instead of only ROI.
- C . allowing different minimum returns for different investments.
- D . requiring multiple-year measures of ROI and evaluating these results along with the residual incomes from the same periods.
A company has two service departments Security and Human Resources and two operating departments Assembly and Finishing Cost data for these departments are shown below
To determine the full costs of conducting Business m the operating departments the company allocates service department costs to the operating departments Security costs are allocated based on the number of employees and Human Resources costs are allocated based on the number of Human Resources hours used using the step-down method, what amount of Security costs would be allocated to the Assembly department?
- A . $12,727.
- B . $13,333.
- C . $18,773.
- D . $20,000.
Aeronautics Inc. has designed anew airplane that entails an extremely complex manufacturing process Upon reviewing the market Aeronautics’ management believes the price of the plane will need to be set below current manufacturing costs. Some on the management team have recommended stopping the project, however, the CFO believes that the plane will become profitable in the near future.
The CFO most likely used which forecasting method?
- A . Time series.
- B . Learning curve analysis
- C . Exponential smoothing
- D . Cost-volume-profit analysis
MJC Co. is considering adopting a variable costing system using variable costing rather than absorption costing will be more advantageous to MJC because the variable costing system
- A . more readily provides data needed for cost/volume/profitanalyses done by management
- B . focuses on gross profit as the best indicator of a company’s ability to cover its expenses
- C . assigns all costs of manufacturing to products in order to properly match cost of production with revenues
- D . allows the financialstatements released to internal users to agree with the GAAP financial statements issued for external use
A company reported that its shareholders’ equity decreased in the recent year. This could occur if
- A . dividends paid were less than net income.
- B . dividends paid were greater than net income
- C . new common stock was sold for greater than par value
- D . new common stock was sold for less than par value
A company has prepared the following pro forma income statements. It plans to sell 10,000 units in the current year and 11.500 units next year.
- A . Increase sales revenue by 15%.
- B . Reduce cost of goods sold by $1.00 per unit
- C . Increase gross profit margin by 15%
- D . Reduce operating expenses by $1.00 perunit
After a recent earthquake in a nearby city the board of directors of a company has requested a review of the company s disaster recovery plan.
Which of the following would be classified as a weakness in the company’s disaster recovery plan?
- A . Management has decided not to maintain a hot site because it was determined that the costs outweigh the benefits.
- B . The details of the disaster recovery plan stipulate that internal audit should review the plan every other year rather than annually.
- C . A cold site with backup data and documents is maintained on the basement level of the company s headquarters.
- D . Members of the company’s disaster recovery team maintain current copies of the disaster recovery plan m their homes.
A manufacturing companyis setting a standard number of labor hours for a product Management creates a draft standard and asks for employees’ feedback.
Which one of the following statements best represents the type of standard that is being set?
- A . A participative standard because It includes management’s Input to determine the standard.
- B . An authoritative standard because the employees helped to determine the standard
- C . A participative standard because the employees will more likely view the standard as reasonable.
- D . An authoritative standard because management still will ensure the standard fits the strategy
The master budget for a company contains mefollowing production requirements.
Quarter 1― 50,000 units
Quarter 2 ― 55,000 units
Quarter 3 ― 45,000 units
Quarter 4 ― 52,000 units
Each unit of product requires four pounds of direct material. The company has a policy to begin each quarter with an inventory of aired materials equal to 20% of that quarter’s direct material requirements. The budgeted direct mate da I purchases for the third quarter would be
- A . 36, 000 pounds
- B . 41,400 pounds
- C . 49, 400 pounds
- D . 185, 600 pounds
The manager in charge of the disaster recovery plan for a company has ensured that there is off-site storage of key data programs, operating systems and documentation.
Which one of the following is the best next step to be prepared for a disaster?
- A . She should enter into reciprocal agreements with alternative ”hot” sites.
- B . She should make sure that everyone Knows the location of offsite data storage.
- C . She should create a planning document including a list of critical applications.
- D . She should ensure that the "cold" sites are fully equipped and ready.
The following information pertains to Wang Corporation which usesstandard costing for its materials.
The following information pertains to Wang Corporation which uses standard costing for its materials.
What is me amount of the unfavorable material-related variance that would appear on a report to the production foreman?
- A . $4,000
- B . $5,000
- C . $5,600
- D . $6,000
A corporation had foreign currency translation gains from converting the financial statements of its foreign operations into U.S dollars.
How will these gains be reported on the corporation’s financial statements?
- A . As a current asset on the balance sheet
- B . As a net increase in cash in the operating activities section of the statement of cash flows
- C . As part of net income on the income statement
- D . As part of comprehensive income on the income statement
Marsalis Products Inc. manufactures and sells batteries and cables for computers.
The latest information on the products and their costs is shown in the following table.
Note: 1 Fixedmanufacturing cost of S1.500,000 per year is allocated to products based on the number of machine hours required to produce the product at a rate of S3 per machine hour.
Based on the information above, what is the annual amount of earnings before interestand taxes (EBIT)?
- A . $1,460,000.
- B . $2,920,000.
- C . $2,960.000.
- D . $4,420,000.
A company had 100.000 shares of common stock issued and outstanding at January 1.
During the year, the company took the following actions:
- A . $50.000
- B . $75,000.
- C . $100,000.
- D . $150,000
when considering data visualization elements, the incorporation or color, shape, size, or animation can be used to address
- A . multiple variables
- B . complexity
- C . data distortion
- D . data myopia
A company has the following accounts included in its trial balance as of December 31
What amount of equity will be reported on me company’s balance sheet as of December 31?
- A . $626,500
- B . $657,500
- C . $92,500.
- D . $599,000.
All of the following are limitations of teaming curve analysis except that
- A . the learning rate tends to be affected by seasonality in sales
- B . the estimated learning rate might be unreliable because other factors could have caused the change
- C . the learning rate is assumed to be constant
- D . it is appropriate only for labor-intensive repetitive tasks
A company announced a stock dividend under which 1.000.000 shares will be issued to the holders of the 10.000.000 shares that are currently outstanding. The stock which has a par value of $1 per share, traded at $10 on the dividend declaration date.
How will shareholders’ equity be affected by this stock dividend?
- A . Retained earnings will decrease by $1.000.000
- B . Retained earnings will decrease by $9.000.000
- C . Paid-in capital will increase by $9,000.000
- D . Common stock will increase by $10.000.000
Harris Company sells two products with the following characteristics.
Harris Company’s total sales-mix variance for the year is
- A . $300,000 Unfavorable
- B . $350,000 unfavorable
- C . $375,000 Unfavorable
- D . $725,000 Favorable
Anatolian Textile Company produces blue-jean pants for a globally known blue-jean brand and its annual financial results are shown below.
Based on the table the sales-price variance for the company is
- A . 4,500 unfavorable
- B . 4,500 favorable
- C . 10,500 favorable
- D . 10,500 unfavorable
in preparing Klein Corporation’s master budget for the following calendar year, the manager of the Production Department requested the purchase of a new piece of machinery with a purchase price of $150.000 in addition, the cost of installing the machine would total $13.000. The purchase price of the machine would be financed by a 6%. 5-year loan with interest due quarterly. The amount Klein Corporation should include in its Capital Expenditures Budget due to this purchase is
- A . $13,000
- B . $22,000
- C . $163,000
- D . $172,000
A company s accounting department is run by only one accountant.
Which one of the following can be implemented as a detective control?
- A . Require the accountant to double-check his work
- B . Require the accountant to update cash balance regularly
- C . Train another employee to perform bank reconciliations
- D . Train another employee to record journal entries.
The best way to illustrate the entire distribution of numerical data for a single variable is with a
- A . pie chart
- B . bubble chart
- C . histogram
- D . heat map
A company manufactures dining tables.
The variable costs per unit are as follows.
Other costs are fixed and include advertising costs of $45,000 per year administrative costs of $55,000 annually and fixed manufacturing overhead of S250.000 per year based on Budgeted production of 10.000 dining tables There was no beginning inventory During the prior year, a total of 10.000 dining tables were manufactured, with 9 000 dining tables sold at $100 each.
Based on the above information what would be the cost of the ending finished goods inventory under absorption (full) costing?
- A . $45,000.
- B . $70,000.
- C . $80,000.
- D . $100,000.
The contribution margin data is shown below for several strategic business units (SBU).
which SBU has the lowest contribution margin ratio?
- A . SBU A.
- B . SBU B.
- C . SBU C.
- D . SBU D.
A company’s return on investment will increase it expenses decrease by $100 and
- A . net profit decreases by $100
- B . sales decrease by $100
- C . net profit remains unchanged
- D . total assets remain unchanged
A new restaurant chain has installed a new restaurant management system. However many employees havecomplained that the restaurant management system is not user-friendly and has caused many customer service issues.
Which one of the following may help to improve system performance?
- A . CVP analysts
- B . Business process analysis
- C . Sensitivity analysis
- D . Exploratory data analysis
A company recently used 500 direct labor hours to manufacture ten units of a new product, if the company employs the cumulative average-time learning model with a 90% learning curve, the number of direct labor hours the company would expect to use to produce the next ten units of this product is
- A . 500
- B . 475
- C . 450
- D . 400
in order forthe IT manager in cnarge of a company’s disaster recovery plan to have complete planning documentation, he should ensure that the documentation includes all of the following except
- A . the results of the latest disaster recovery test run
- B . the phone numbers of key employees
- C . vendors who win set up the hot site
- D . program and operating system documentation
Which statement below best describes therelationship among a company’s organizational structure, policies. objectives and the effectiveness of the control environment?
- A . The policies, organizational structure, and objectives set the foundation tor the internal control components and provide discipline and structure
- B . Management can determine the organizational structure, policies and objectives to
create the control environment after the risks are identified - C . The control activities have more influence on the control environment than the organizational structure policies and objectives
- D . The control environment often Is completely Independent and distinct from the organizational structure policies. and objectives
Which one of the following best describes the difference between a normal costing system and an actual costing system?
- A . Direct labor cost is estimated using a predetermined rate under a normal costing system, while it is the actual value under an actual costing system.
- B . Direct material cost is estimated using a predetermined rate under a normal costing system while it is the actual value under an actual costing system
- C . Factory overhead cost is estimated using a predetermined rate under a normal costing system,while it is me actual value under an actual costing system.
- D . Both direct labor cost and direct material cost are estimated using a predetermined rate under a normal costing system, while they are the actual value under an actual costing system
Company A currently uses U.S GAAP while Company 8 is currently using IFRS. Both companies are individually in the process of internally developing trademarks that have been demonstrated to be technically andeconomically feasible Both companies have incurred development costs in the current year with respect to their internally developed trademarks.
Which one of the following best describes how Company A and Company B should account for these development costsin their financial statements?
- A . Company A should expense the development costs while Company B should capitalize the development costs
- B . Company A should capitalize the development costs while Company B should expense the development costs
- C . Both Company A and Company B should capitalize the development costs
- D . Both Company A and Company B should expense the development costs
For a manufacturing company what is the most Importantadvantage of using variable costing rather than absorption costing?
- A . Variable costing includes only variable direct and indirect costs in inventory which makes it more useful for short-term decision making and performance evaluation.
- B . Variable costingis the required inventory method for external reporting in most countries and therefore is less costly to implement
- C . Variable costing is cost-effective and Jess confusing to managers and is therefore more useful in performance evaluation.
- D . Variable costing measures the cost of all manufacturing resources, whether variable or fixed and thus provides the most complete cost.
A company expects sales of 225 000 units in April, 210 000 in May and 190 000 in June.
The company maintains an ending Inventory each month of 25% of the next month’s sales.
How many units should the company plan to produce in May?
- A . 205,000 units.
- B . 210,000 units
- C . 215.000 units
- D . 221,250 units
Which one of the following items is included in accumulated other comprehensive income?
- A . Gains and losses on the sale of equipment
- B . Effect of a change in accounting method
- C . Realized gains on available-for-sale securities
- D . Foreign currency translation adjustments
A building materials retailer uses a LIFO method of valuing its inventory. The company has just introduced a new product.
The following is the activity for the first month of this new product.
• Purchase of 3,000 units on the 2nd of the month at $5.00.
• Purchase of 6,000 units on the 12th of the month at $4.80.
• Purchase of 2,000 units on the 31st of the month at $5 60.
• Sales of the product were 4,000 units on the 20th of the month. Using the periodic method, the ending value of the inventory would be
- A . $34,200.
- B . $35,000.
- C . $35,200.
- D . $35, 800.
Sportsman inc. manufactures ceramic sports-related figurines. The company’s oldest lines are mass produced in a standard variety of colors and designs. A few years ago in an effort to increase sales, the company began accepting special orders with modified designs in school colors. The minimum order for these special designs is 100 units. The special orders have become very popular and now represent one quarter of the units produced.
Estimates for the year follow.
Design costs manufacturing overhead and materials handling costs are budgeted at $700.000 for the year Sportsman has always used a traditional cost allocation system using aired labor hours as the allocation base but is considering an activity based costing system. The most likely result of changingto an activity-based system is that
- A . the overhead costs allocated to the special designs will likely increase because the special design requires proportionally more overhead activity
- B . the overhead costs allocated to the special designs will likely decrease Because demand for them has grown
- C . total production costs are likely to decline as department are held responsible for their costs
- D . the costs allocated to each product should not change but management will be able to control various components ofthe cost more effectively.
As part of the COSO Internal Control Framework segregation of duties and documentation areincluded in which of the components of the COSO model below?
- A . Operating environment
- B . Risk assessment
- C . Control activities
- D . Information and communication
Sullivan Company’s static Budget for the past yearis shown below.
Sullivan actually sow 11.000.000 units throughout the year which was a quantity within its relevant range. The flexible budget net income that should be used to compare to actual results is
- A . $4,200,000.00
- B . $7,500,000.00
- C . $6,580,000.00
- D . $11,500,000.00
GorCo anticipates 10% sales growth each month for the next three months, and plans to sell 120.000 units offinished goods In the first month. The company plans production so that ending inventory is equal to 5% of the next month’s budgeted sales On GorCo’s production budget for the second month the number of finished goods units to be produced would be
- A . 131,340.
- B . 132,000.
- C . 132,600.
- D . 132,660.